Debt-laden Agricultural Bank of China is ready for its long awaited restructuring, the nation's chief central banker said Tuesday, a bailout expected to cost the Chinese tax payer 40 billion dollars.
People's Bank of China governor Zhou Xiaochuan made the remarks at a financial forum in the Chinese capital, saying reform of the weakest of the nation's big four state commercial lenders would start "next year."
"Soon there will an initial plan to carry out research, design and policy steps," Zhou said.
Agricultural is the last one of the big four state lenders to undergo a government rescue package that aims to eventually float the bank's shares as a way of making it a commercially viable institution.
The bank, whose indiscriminate lending in support of the agricultural sector has made it technically insolvent, is expected to receive up to 40 billion dollars in bail out money, according to previous state reports.
The exact number of bad debts on Agricultural's books is unknown, but independent analysts have estimated the bank carries at least 100 billion dollars in unrecoverable loans.
At the forum, Zhu Hongbo, president of the bank's Beijing branch, made similar comments about Agricultural's restructuring plans but did not provide details.
Beijing has injected a total of 60 billion dollars into the other three major banks — Industrial and Commercial Bank of China, the Bank of China and the China Construction Bank — to clean up their non-performing loans.
